Friday, December 31, 2010

The recent Health Care Bill lawsuits have revealed a common misperception about Social Security. I have always thought about Social Security as a retirement benefit from all the years I paid into it. After all, Social Security sends me an annual projection of the payments I can expect to receive when I reach full retirement age.

In a recent court decision, a judge struck down federal government mandate for all individuals to purchase health insurance as unconstitutional. Specifically, the federal government cannot require individuals to make a specific purchase, even if it is for an individual's own good. However, the federal government can levy a tax that raises revenue to provide services for the good of all citizens. In this case, there is no correlation between the tax an individual pays and the direct benefit the same individual receives. In fact, an individual may receive no direct benefit.

Thus, the common belief that Social Security retirement payments are owed to retirees is not correct. In reality, Social Security withheld from a paycheck is a tax, not a premium, and the federal government is not obligated to provide specific benefits to an individual for paying a tax. Thus, the government could decide to eliminate "guaranteed" Social Security payments at anytime and recipients would have no recourse, except voting out a politician.

When I turned 50, I started including Social Security payments in my retirement planning. Perhaps a better approach would be to stop counting on getting a payment until after I receive my first check :-)

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial or retirement advice. Please consult a professional advisor.

Thursday, December 30, 2010

"Every system is perfectly designed to get the results it gets." ~ attributed to Paul Batalden, M.D.

Sometimes good intentions lead to unintended consequences. I recently observed the phenomenon at my daughter's kindergarten holiday party. As a finale, a musical chair game was played in which those eliminated would receive their take home present. The game was designed to be an effective way to distribute the gifts and prevent those eliminated from feeling they had lost.

For the the first couple rounds, the game went as expected. Every child tried to find a seat when the music stopped. Then something interesting happened. After noticing the eliminated child received a prize, some participants purposely hesitated before sitting in a chair. Before lone, the game to evolved to four or five children refusing to sit, waiting for others to take the available seat. Obviously, those participants had decided it was better to be eliminated and get a prize than to continue playing to be the winner.

In hindsight, the result shouldn't have been surprising. After all, why play to win the game, when getting eliminated gets the child the same prize faster - less work with the same reward. To me, this lesson learned was the wrong one. Perhaps, the winner should have also received a special prize, creating an extra benefit from working hard and winning.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial, education or parenting advice. Please consult a professional advisor.

Wednesday, December 29, 2010

It's been over four years since I started My Wealth Builder. As I think about topics to write , I often remember, "I've written about that before," and decide to find a new topic. However, since many principles of personal finance are timeless, I want to include them in a recent post on My Wealth Builder. Therefore, I have started a series called "Timeless Articles from the Archives" that will highlight posts from the same week in 2006-2009.

Brushing Up On Job Interviewing Skills - Since I had hiring responsibility in the job from which I retired, I know how the process works from the hiring side. I found it interesting to be on the other side as the interviewee.

Welcome to twenty-first edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic.

For reading convenience, I have listed the posts with a brief summary or comment by the submitter and organized them into seven categories: Earning, Investing, Insuring and Protecting, Living Frugally, Retiring, Saving and Taxes.

Living Frugally

Tim Rakeman presents How To Be Frugal: Grow a Garden to Save Money posted at All Things Frugal, saying, "When it comes to saving money on groceries, unfortunately that usually means eating a lot of processed crap. Anyone who has been in a grocery store knows the cost of a calorie is a lot cheaper in the form of a frozen pizza than it is in an apple."

That concludes this edition. Submit your blog article to the next edition of The Wealth Builder Carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Monday, December 27, 2010

Every year, as the days get shorter, I feel less energetic and less productive. In the past, I tried taking vitamin D and doing outdoor exercise, but these activities seemed to have minimal impact. So I lived with the lower energy state until spring. This year I'm going try something different.

For Christmas, my wife gave me a 4500 lux natural spectrum light, which can help reduce the winter blues. I plan to use the light for about an hour every morning right. I've set the light right by my desk in the den and will turn in on when I do my morning work on the computer.

So far, I've used the light for two consecutive mornings. I have felt an increase in energy and an improvement in mood. At this point, it's difficult to conclude whether it is a placebo effect or a real change. For now, I plan to continue to use the light regularly.

In addition, I will begin taking vitamin D3 and doing some outdoor exercise again. Hopefully, the combination of the three activities (natural spectrum light, vitamin D3 and outdoor exercise) will successfully fight my winter blues.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or health advice. Please consult a professional advisor.

Sunday, December 26, 2010

For my 2008 New Year's resolution, I had set a goal of losing 10% of my weight. In September 2010, I achieved that goal for the first time. It took me 20 months (8 more than expected) to reach my goal. During this time, I've noticed that my weight loss seemed to happen in spurts, across similarly sized increments. It almost seemed that there was a tipping point that lead to a spurt of weight loss. Here are my observations of the changes that led to the tipping points:

Reduced eating. The first 2.5% of weight loss came after simply cutting back on my food intake. I just ate less. However, I was constantly hungry and plateaued at 5% less weight.

Started exercise program. The next step was to begin an exercise program. As a retiree, I was able to join my company health club for a reasonable cost. I began a doing a weight training program for three days a week. I lost another 2.5% but no more.

Increased exercise. Although I could only to strength training three days a week, I added some cardio workouts and achieved 6 days a week of exercise. Off came another 2.5% but I was stuck at 7.5% weight lose

Changed diet. The final 2.5% loss came when I reduced the amount of bread, cheese and wine/beer in my diet.

In September, I was within one pound of my weight at the start of college. However, during the holiday season, I have been enjoying the holiday festivities a bit too much, especially with respect to food. I've gained about 2.5% in the past month. At this point, I'm not too concerned since my exercise has also dropped off significantly. I believe I can sustainably maintain the 10% weight loss by renewing my diet change and boosting my exercise back to three days a week.

However, to lose an additional 5%, which will be my 2011 goal, will probably require another one to two tipping point actions on my part.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or weight management advice. Please consult a professional advisor.

Wednesday, December 22, 2010

It's been over four years since I started My Wealth Builder. As I think about topics to write , I often remember, "I've written about that before," and decide to find a new topic. However, since many principles of personal finance are timeless, I want to include them in a recent post on My Wealth Builder. Therefore, I have started a series called "Timeless Articles from the Archives" that will highlight posts from the same week in 2006-2009.

Welcome to twentieth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic.

For reading convenience, I have listed the posts with brief summaries, often by the author, and organized them into seven categories: Earning, Investing, Insuring and Protecting, Living Frugally, Retiring, Saving and Taxes.

Dividend Investing For Beginners - "A well constructed portfolio of high yielding dividend stocks is a great foundation upon which to build a strategy to achieve financial independence. It is the passive income generated by such a portfolio which ultimately provides financial freedom. Watching the steady stream of passive income which results from dividend investing is rewarding in more ways than one."

15 Stocks Growing Their Cash Dividends - "Throughout history there have always been great companies that stand head-and-shoulders above their peers and the competition. They are loved by their shareholders, hated by the competition and known by all. Just as all great companies have have something in common, great dividend companies also have something in common – they consistently raise their dividends each year."

Saving Money at the Grocery Store - "When money gets tight, food, unfortunately, just cannot be cut out of the budget. Well, I imagine one could do that, but it’s not a healthy way to save money. It is entirely possible to get more for your money at the grocery store. Change where you shop, what brands you buy and what types of products you purchase and you will soon see some significant savings."

Retiring

The Best Index Funds for Retirement Investing - "Index funds can be a great investment for the long-term retirement investor. They are cheap and easy to understand. This post also includes a list of some of the best index funds available today."

That concludes this edition. Submit your blog article to the next edition of The Wealth Builder Carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Monday, December 20, 2010

As part of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (aka. extension of Bush Tax Cuts bill), the IRA charitable rollover has been extended through 2012. Basically, the IRA charitable rollover allows taxpayers over age 70-1/2 to contribute up to $100,000 directly from an IRA to a qualified charity. By doing a charitable rollover, taxpayers do not claim the IRA distribution as income, nor do they deduct the contribution on their tax return.

An IRA charitable rollover has the following benefits when doing charitable gift planning:

Distribution is not included in gross income. The IRA charitable rollover does not increase adjusted gross income. Therefore, it won't increase income above certain thresholds (eg., making Social Security payments taxable) or be included in income for state taxes.

Deduction not necessary. Since an IRA charitable rollover is not included in income, no charitable deduction is needed to obtain the tax benefit. Thus, taxpayers who use a standard deduction will still get a tax break from making a charitable contribution.

RMD can be used. An IRA charitable rollover can be made from the funds used to meet a taxpayer's RMD (required minimum distribution) requirement.

If I were over 70-1/2, I would make all my monetary contributions as a IRA charitable rollover for 2010 - 2012 in the following order:

RMD - First, I would use my RMD to make IRA charitable rollovers. Since I am required to take an RMD each year, I should use it to make any planned cash contributions.

Traditional IRA - Next, for charitable contributions over the RMD amount, I would take the funds out of my traditional IRA.

I would not make IRA charitable contributions from any Roth IRA accounts, since Roth IRA distributions are already exempt from taxes. Here are some additional details on the IRA charitable rollover.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or tax advice. Please consult a professional advisor.

Sunday, December 19, 2010

Based on the outcome of the 2010 mid term elections, I expect that government policies will be more pro-economic growth and pro-business development. Thus, for 2011, I will have an overall investing theme of buying stocks. Specifically, I will concentrate on two types of stocks:

Dividend paying stocks. As I've written previously, dividends account for about 40% of the stock market returns. In addition, there are many good stocks paying 3-6% dividends which is significantly above the 5 year CD rates. Finally, with the extension of the Bush tax cuts, dividends are taxed at either 15% or 0% depending on the taxpayer's marginal tax rate.

Large cap growth stocks. As the economic recovery continues, large cap growth companies should continue to benefit, growing revenues and profits. Also, as interest rates rise, large cap companies will have sufficient financial strength to maintain growth.

In our managed accounts, I have already put more funds with a large cap growth stock investment manager. In 2011, I plan to put additional funds with a dividend stock investment manager. For our own trading accounts and IRAs, I will focus purchasing large cap stocks with dividends greater than 3%. In the next couple weeks, I will be doing research to identify specific dividend stocks and making some initial purchases in our personal accounts.

For more on New Beginnings, check back every Sunday for a new segment.

Saturday, December 18, 2010

"Those who cannot remember the past are condemned to repeat it. " ~ George Satayana

Increasing taxes to reduce the deficit or increase tax yield doesn't work. Those that say otherwise are ignoring historical data.

Additional tax revenue does not offset a deficit. Higher Taxes Won't Reduce the Deficit (subscription may be required to view article) by Stephen Moore and Richard Vedder in The Wall Street Journal confirmed what I have suspected: increased tax revenue does not reduce the deficit. In fact, Congress spends an average of $1.17 for every dollar increase in tax revenue. The data from 1947-2009 showed spending increases ranged from $1.05 -$1.81 for every additional dollar of tax revenue collected, despite promises of spending cuts by Congress in return for tax increases.

Higher taxes does not increase tax yield. In an earlier post, Will Higher Tax Rates Create More Tax Revenue?, Hauser's law claims that the tax yield has been relatively stable at about 19.5%, despite a decline in the top tax rate from 91% to 35%. One reason may be that higher tax rates cause individuals to shield or delay taking income to reduce taxes.

To me, a better solution to increase tax revenue is for the government to focus on enabling economic growth. Doing so makes great financial sense. When the economy grows, GDP increases, and the amount of tax revenue also grows. In addition, the employment rate goes up, which makes voters a lot happier :-)

For more on Reflections and Musings, check back every Saturday for a new segment.

Friday, December 17, 2010

This year, I decided to do some of my Christmas shopping at a Premium Outlets Mall. In preparation, I looked at their website to maximize my benefits from shopping there. Much to my surprise, I learned that some of the stores had a 10% discount for seniors age 50 and older on Tuesdays. I had previously thought that the earliest senior discounts began at 55 with most senior discounts starting at 60 or 62.

Since I'm 52, I visited the Premium Outlets on a Tuesday and took advantage of senior discount. Two of the three stores in which I made purchases offered the 10% discount for those 50 and older. At one store, the 10% discount was in addition to sale prices that were already 40% off. I'm definitely planning to make another trip on a Tuesday to do some after Christmas shopping:-)

For curiosity, I checked the Internet for other senior discounts that start at 50. There were four:

Banana Republic

Choice Hotels

Kmart prescriptions

National Car Rental.

Most of the other senior discounts start at 55, 60, 62 or 65. Here is a Senior Discount Directory that I found at About.com. A significant number of senior discounts are at restaurants, but there are also senior discounts at hotels, department stores, and grocery stores.

It's nice to get a few benefits from being older. I hope these senior discounts, especially the ones at grocery stores, are still in effect when I reach the appropriate age.

For more on Reaping the Rewards, check back every Friday for a new segment.

Thursday, December 16, 2010

One of my challenges with getting older is my brain still competes like my body is twenty years old. For example, in my tennis league, my brain wants me to run after balls that I could get in my twenties. However, my fifty-two year old body is often one to two steps short even though my brain knows where I should be. Most of the time, my body wins over my brain. Occasionally, I get overzealous and my brain takes over. In those cases, my brain has caused a pulled muscle by telling my body to move faster than possible for a forty or fifty-something athlete.

My solution is to make sure I play against forty to fifty year old competitors most of the time. While my brain still competes on a twenty year old level, I know my body can only be sustainably competitive against peers at my age level :-)

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial, health or aging advice. Please consult a professional advisor.

Wednesday, December 15, 2010

It's been over four years since I started My Wealth Builder. As I think about topics to write , I often remember, "I've written about that before," and decide to find a new topic. However, since many principles of personal finance are timeless, I want to include them in a recent post on My Wealth Builder. Therefore, I have started a series called "Timeless Articles from the Archives" that will highlight posts from the same week in 2006-2009.

Tuesday, December 14, 2010

While buying presents can be expensive, there are lots of activities we do at Christmas time that are low or no cost. Here are some of our favorites:

Christmas parades. Starting with the first Saturday in December, several municipalities in our area host elaborate Christmas parades with floats, horse drawn carriages and marching bands. Many of the parades take place in the business district of the municipality in order to create customer traffic for the shops. Admission is free and there is never an obligation to make a purchase.

Outdoor light displays. Within driving distance, several homes do elaborate Christmas light displays. In addition, businesses sponsor a light display at a local park which charges a nominal admission fee per car. Other commercial light displays, e.g. amusement park, are much more expensive.

Miniature train displays. A local business has been producing a Christmas train display for over 50 years. Admission is free.

Santa visits and other activities. Several business in our are hosting Santa visits and other Christmas activities for free. Of course, the intent is to attract customers to their stores. However, there is no obligation to make a purchase.

This year, we will miss the Christmas parades due other commitments. However, we will continue the tradition of viewing outdoor light displays and vi sting the miniature train display. In addition, we will try some of the more elaborate Christmas activities being held by local businesses this year.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial or holiday advice. Please consult a professional advisor.

Welcome to nineteenth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic.

For reading convenience, I have listed the posts with brief summaries, often by the author, and organized them into seven categories: Earning, Investing, Insuring and Protecting, Living Frugally, Retiring, Saving and Taxes.

Insuring and Protecting

Understanding Life Insurance: Part One - "Life insurance is a plan where you pay money to an insurance company while you are living, and the insurance company pays your chosen beneficiary upon your death."

Investing

16 Stocks Growing Their Cash Dividends - "When people learn that I am an income investor, the reaction is often a desire to discuss high-yield investments. Many people commonly confuse income investing with high-yield investing. The two are not the same. High-yield investing often carries a greater degree of risk than I am willing to accept. For me, I will continue to focus on high-quality dividend stocks at lower, but growing, yields."

Contrarian Investors: Best Stock Investment - "With 2010 drawing to a close, beaten down stocks are likely to come under more pressure from investors selling these names to recognize losses for tax purposes. The article discusses opportunities in one of the most 'unloved' groups in the stock market today."

Retiring

Saving

Saving Money – It’s Not Just For The Wealthy, It’s Why They’re Wealthy - "Simple and practical advice about getting into the habit of saving money. Even though wealth is a relative term, it's something that will only accumulate if we act deliberately to cause it to happen. We need to stop admiring those with wealth, and start acting more like them."

That concludes this edition. Submit your blog article to the next edition of The Wealth Builder Carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Monday, December 13, 2010

To me, measuring financial status and progress is an important element personal finance. Without measures, I wouldn't know how well we are doing financially. By getting measures, I can determine whether we are on track or make changes. Here are the two questions that I try to answer with the data:

Is the plan working? This is a harder question to answer than it seems. In an up market, almost every plan is working. In a down market, almost every plan is not working. We've learned to ask this question separately for our short term investments and our long term investments.

What changes needed? If the plan is not delivering the expected results, then we determine if changes are needed and make the adjustments. For short term investments, we will decide on making a change within a couple months. For our long term investments, we will wait longer before making a change in strategy, perhaps one to two years.

Two years prior to retiring in 2007, I started doing a quarterly analysis of our financial situation. This analysis helped us make some good adjustments to our financial plans in 2009. First, we paid off our home mortgage, which reduced our monthly living expenses by 24%. Second, we started keeping 3-5 years of living expenses in low/no volatility investments such as CDs.

For now, the new plan is working for us. Our longer term stock investments have recovered from the March 2009 bottom. Also, we now have a good margin of safety for the next bear market since 3-5 years of livings expenses are in investments where the principal won't decline.

For more on Strategies and Plans Ideas, check back every Monday for a new segment.

Sunday, December 12, 2010

In late 2009, we began a process of decluttering by donating or discarding items we no longer needed. We did as much as we could and put the process on hold in 2010 since we would not be able to deduct charitable contributions. In 2011, we will renew our effort on decluttering and, hopefully, complete the task before the end of the year. Here are some of the psychological and financial benefits we expect from decluttering:

Less work. In my experience, everything requires maintenance. More things means more maintenance. More maintenance means more work and time spent to keep the item. The reverse it also true. Fewer things means less maintenance work and more time.

Increased space. Typically, our stuff expands to fill the space we have. We have only used outside storage when we transferred overseas and couldn't take all our belongings. Otherwise, we have never rented outside storage. I definitely do not want to start now that we're retired. In fact, I'd love to free up some space in our house.

Extra cash or higher deductions. For items in good condition, we can either sell them at a yard sale or donate them to a charitable organization. Our preference is to donate to a charitable organization and take the deduction on our tax return. In our experience, donations take much less time and effort than a yard sale.

I am looking forward to experiencing these benefits in 2011. In fact, I am already gathering items to make our first charitable contribution on January 3, 2011.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or lifestyle advice. Please consult a professional advisor.

Friday, December 10, 2010

The Last Reunion (subscription may be required) by Byron Wien in The Wall Street Journal got me thinking about my classmates from elementary school though college. That evening, I even pulled out my high school year books and reminisced about the trials and tribulations of those four years. It was fun reading the comments that were written over 35 years ago by friends and acquaintances.

I attended my 5 year high school and my 5, 10 and 15 year college reunions. Since then, I stopped attending probably because the present and future were more important in my life. However, now that I'm retired, my interest in reconnecting with old classmates and friends has increased.

Next year will be 35 years since I graduated from high school. As a start, I will check with a few classmates with whom I have maintained contact and check if there is an interest to reconnect at a reunion even if it is not formally organized. It would be great to see old friends, remember the fun times we had and learn about each other's lives since high school.

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial or social advice. Please consult a professional advisor.

Wednesday, December 08, 2010

To minimize our tax liability, I usually review our tax situation in December. Since retiring, our year end tax strategies have been somewhat different than those in our working years.

For example, we plan to use the standard deduction for the first time on the 2010 federal tax return instead of our usual itemized deductions. As a result, we have shifted our regular itemized deductions to either the 2009 or 2011 tax year. In addition, we still are carrying large stock losses from 2008 and 2009 tax years. Therefore, for 2010, our year end tax planning will focus primarily on retirement and college savings accounts instead of on charitable contributions, property taxes, and stock sales.

Here are our key tax related activities for the 2010 tax year:

Roth conversions - We plan to continue converting some of our IRA funds to Roth IRAs. Depending on the amount, some or all of the tax for the conversion will be offset by the child, saver's and making work pay tax credits. The conversion needs to be initiated by December 31, 2010.

College saving account - We will make the maximum contribution that is deductible on our state tax return. The contribution is not deductible on the federal tax return. This contribution needs to be completed by December 31, 2010.

IRA contributions - Our current plan is to make the maximum contributions to traditional IRAs. The contributions will reduce our adjusted gross income and qualify us for the saver's credit. This contribution can be made until April 15, 2011 and still be used on our 2010 return.

Below certain conversion amounts, I estimate we can reduce our federal tax liability to zero and reduce our state tax liability to a few hundred dollars. Thus, it may be possible to get refunds of almost all taxes withheld or made as estimated payments for 2010. I will be working through the scenarios in the next week to finalize the amount for the Roth IRA conversions.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial or tax advice. Please consult a professional advisor.

It's been over four years since I started My Wealth Builder. As I think about topics to write , I often remember, "I've written about that before," and decide to find a new topic. However, since many principles of personal finance are timeless, I want to include them in a recent post on My Wealth Builder. Therefore, I have started a series called "Timeless Articles from the Archives" that will highlight posts from the same week in 2006-2009.

Welcome to eighteenth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic.

For reading convenience, I have listed the posts with brief summaries, often by the author, and organized them into seven categories: Earning, Investing, Insuring and Protecting, Living Frugally, Retiring, Saving and Taxes.

Investing

12 Stocks Not Missing Their Opportunity To Increase Dividends - "In everything we do, we always want to be the best or be associated with the best. You never hear fans yelling, ‘We’re number 2, we’re number 2″, while holding two fingers in the air. The same is true when selecting dividend stocks. One attribute of the very best dividend stocks is a long history of consecutive dividend increases."

Living Frugally

Retiring

Social Security Benefits for your Spouse - "You may know about receiving social security benefits for yourself when you retire. But did you know that when you retire, your spouse also receives benefits?"

Saving

Choosing a College 529 Plan - "Since we plan to cover our daughter's college education, we looked into college savings options not long after she arrived."

That concludes this edition. Submit your blog article to the next edition of The Wealth Builder Carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Monday, December 06, 2010

As I've become older, it seems more important for me to have good athletic shoes for my sports activities. Since I have flat feet, my joints are less sore after vigorous activity when wearing good shoes. However, athletic shoes are often designed specifically for a sport and last less than a year. To mitigate the cost of ahigher frequency purchases, I extend the use of the shoes by cycling them through normal usage. Here is a typical cycle of my athletic shoes:

Exclusive use for a sport. Initially, I wear the shoes for the sport for which they are intended. Tennis shoes are only worn when I play tennis. Running shoes are only worn when I run. As a result, the shoe uppers are still in excellent condition after the soles and cushioning are worn out.

Use for casual activities. After sports use, I wear my athletic shoes for everyday activities such as shopping, attending classes, and running errands. Since the uppers are still in good condition, I can use the shoes for most casual wear activities, including restaurants and parites. In addition, the cushioning is still excellent for everyday walking.

Use for yard work. When the condition of the uppers decline, I start wearing the athletic shoes for yard work, such as gardening, tree trimming and grass cutting. Since the shoes are old, I don't mind if they get muddy or stained. I keep using these shoes until they are worn out or a new pair is rotated in from casual wear use.

By wearing my athletic shoes for multiple purposes, I maximize the useful life of my tennis and running shoes. Thus, I don't feel as bad spending $80+ for specialized sports shoes.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or sports wear advice. Please consult a professional advisor.

Sunday, December 05, 2010

Financially, 2011 could be a make or break year for our retirement savings. Here are a couple areas of concern:

Economy - Recovery or double dip? I have been expecting recovery. However, the Friday unemployment report of 9.8% was discouraging. I still believe recovery is the more likely scenario given that many businesses are doing well. Hopefully, employment will increase once businesses have more visibility government business and tax policy.

Stock market - Bull or bear? I am expecting positive stock market return for 2011, but am prepared for a possible bear market. Recently, we have put more funds into equities. We plan to take profits as the market advances. Also, I will be more prepared this time to short stocks if the economy turns bad again.

As long as the economy continues to recover and stock market returns are at least flat, I believe we can stay in retirement. However, if another recession or significant bear market should occur, our plan to stay in retirement may need to be revised.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or retirement advice. Please consult a professional advisor.

Friday, December 03, 2010

For my seasonal part-time financial services job, we are now able to to take certification exams to advance in position and pay level. Last year, I was able to advance eight levels by scoring a passing grade on eight exams. Under the previous system, it would have taken me four years to advance the same eight levels based educational hours. This year, I decided to try advancing the last two levels by taking the required tests.

Personally, I prefer the new advancement system of using certification tests. Previously, we were required to take a specific amount of education hours and were limited to advancing two levels a year. Now, each year, I can advance as many levels as there are certification tests.

While I was able to pass previous exams with minimal study time, I decide to invest more effort in the last two tests to ensure that I would pass on the first try. For today's test, I took all the prerequisite courses, passed all the course exams, and brought the all relevant materials to the test since it was open book. Ironically, despite doing extensive preparation and taking extra time to complete the test, I scored the minimum passing grade the test.

In the past, I would have been disappointed at not getting a higher score. However, now that I'm retired, the minimum passing grade is good enough. For me, it's onto the second and final certification exam.

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial or test taking advice. Please consult a professional advisor.

Thursday, December 02, 2010

"Setting an example is not the main means of influencing another, it is the only means.” ~ Albert Einstein

Since becoming a parent, I've learned that my actions have much more effect than my words. I am the first to admit, my actions don't always match my words, especially with respect to a clean room. Fortunately, for financial situations, our actions match our words over 95% of the time. Here are some areas our daughter has learned from our examples:

Save early and often. We have already opened a UTMA bank account for our daughter. Periodically, we have her put money she has saved into the account. At six years old, she has over $100 saved.

Live below one's means. Sometimes we don't buy things even though we have the money to cover the cost. We explain that we don't want to spend money on an every item we want.

Make choices. We routinely explain that we don't have enough money for everything and that we need to make choices. Sometimes, we demonstrate by spending on choice A over choice B.

Invest in stocks. I've opened a UTMA brokerage account for our daughter. Currently, the funds are invested in CDs. In the future, I will work with her to buy some stocks.

I know many of my financial habits were developed based on what my parents did, which happened to be consistent with what they said. In my case, the acorn didn't fall far from the tree:-)

For more on Crossing Generations , check back every Thursday for a new segment.

This is not financial or parenting advice. Please consult a professional advisor.

Wednesday, December 01, 2010

It's been over four years since I started My Wealth Builder. As I think about topics to write , I often remember, "I've written about that before," and decide to find a new topic. However, since many principles of personal finance are timeless, I want to include them in a recent post on My Wealth Builder. Therefore, I have started a series called "Timeless Articles from the Archives" that will highlight posts from the same week in 2006-2009.

Welcome to seventeenth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic.

For reading convenience, I have listed the posts with brief summaries, often by the author, and organized them into seven categories: Earning, Investing, Insuring and Protecting, Living Frugally, Retiring, Saving and Taxes.

Insuring and Protecting

Investing

Higher Tax Rates And Performance Of Dividend Payers Versus Non Payers - "Tax rates in the U.S. are set to increase if Congress fails to act before year end. Higher taxes on dividends does not necessarily translate into the stocks of dividend payers underperforming the non payers. Allianz reviewed tax rates from 1972 to the present, identified nine distinct time 'regimes', and found dividend-paying stocks outperformed nondividend-paying stocks in all but one period: 1987 (see chart in article.)"

23 Dividend Stocks Paying More Cash - "When selecting income investments, the three most important questions to answer are : 1.) Is the investment increasing its dividend each year, 2.) Is the increase likely to continue into the future and 3.) Are you being compensated for the risk you are taking? When you answer yes to all three of the questions, you just might have found an excellent income investment."

The Dark Side of Real Estate Investing - "We often hear great success stories from successful real estate investors. However, we seldom hear from those individuals who failed as real estate investors and lost money as well. Real Estate investing can be a great way to create wealth, however, it can be a sure fire way to lose a lot of money fast! Find out some of the mistakes that differentiate the super successful investors from the not-so-lucky investors."

The Warren Buffetts Next Door - "Can you really beat the market simply by taking the time and effort to educate yourself on investing? A new book says you can -- and uses ten people who have done just that as support."

Taxes

That concludes this edition. Submit your blog article to the next edition of The Wealth Builder Carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Monday, November 29, 2010

Over the past month, I've been trying to make progress against several large projects. The problem is that each project needs about 20 to 30 hours to complete and I usually don't have the motivation to do the project continuously for several days. My solution has been to work on the project each day for about an hour. My rationale is that I can work on anything for an hour.

This strategy has helped me make significant progress against a some of my projects. Here are the types of projects in which I found the strategy worked best.

Work is naturally spread out over time. The leaves in our yard fall over a two month period. I used to prefer waiting a week or two before starting to rake the leaves. That way I could minimize the number of times I needed to work on an area. This year, I decided to work on the leaves for about an hour each day. Often that meant working on only a limited section of the yard each time. However, by doing this, raking leaves never seemed to be a daunting task and noticeable progress was made each day.

Minimal set time. Several of our gardening projects require nearly zero set up time to do the work: trimming, fertilizing, weeding, and ground cover edging. I can work on these projects an hour at a time, fill up a garbage can, and make noticeable progress.

Reducing clutter in my home office and filing important records also falls into this category.

Annual routine tasks. Rather than wait until tax time to gather records and record the information, I've been taking about 1/2 hour a week to file records and put the information in a spreadsheet. While I will still need about 5-10 hours to complete my tax return, I won't need to spend 25-30 hours preparing.

Of course, this approach won't work for all my projects, especially those that require significant set up or clean up time. For example, when home or yard maintenance projects require an extension ladder, multiple tools, significant clean up or an additional helper, I prefer to work several hours at a time to minimize the proportion of preparation time.

For more on Strategies and Plans, check back every Monday for a new segment.

Sunday, November 28, 2010

Typically, we rake up 45 to 50 bags of leaves every fall. In most years, we put the bags of leaves out with our garbage. Last year, we decided to compost about half the leaves and saved some bags. However,since I wasn't composting correctly,barely any of the leaves had broken down by September of this year. After checking the Internet, I realized my mistake was trying to compost 100% leaves. A proper compost needed a higher level nitrogen source which grass clippings can provide at approximately at a 1:2-3 ratio of grass:leaves. Once I corrected the ratios, I was able to reduce about 20 bags of leaves to a small compost pile of 1/2 cubic yard (about the volume of two 45 gallon leaf bags).

Based on this experience, I believe we will be able to compost all of our leaves this year. We have started a compost pile with 1/3 of the collected leaves and grass clippings from October mowings. Since the internal temperature of the pile has reached 130 degrees, the composting process has already started. We have stored the remaining 2/3 of the leaves and will either add them as the compost pile reduces or save them for the spring when there are more grass clipping.

Hopefully, this process will work and enable us to compost all of our leaves on a annual basis.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or gardening advice. Please consult a professional advisor.

After absorbing increases the past two years, it seems more manufacturers are willing to pass along raw material cost increases to consumers. I've already seen price increases for several items I regularly purchase.

Interestingly, the CPI index and bond interest rates still show little to no sign of inflation. Hopefully, the return of inflation seen at Walmart will soon be reflected in those areas soon.

For more on Reflections and Musings, check back every Saturday for a new segment.

Thursday, November 25, 2010

When I was a child, I loved eating stuffing but it always seemed to run out too soon. Since my mom cooked stuffing by putting it inside a turkey, my solution was to ask for a bigger turkey. My parents humored me and kept getting a bigger turkey each year. One year they bought a 23 pound turkey and it barely fit into our oven. We ate turkey leftovers for quite a long time that year :-)

It wasn't until I in college that I realized that stuffing could also be prepared without putting into the turkey. Thus, the amount of stuffing was no longer limited by the size of the turkey. Large amounts of stuffing could be baked alongside the turkey to ensure I had sufficient stuffing for several days after Thanksgiving.

Finally, after starting my first job, a friend invited me to spend Thanksgiving with his family since I wasn't able to go home. They had one of the best stuffings I ever ate. The secret ingredient was sausage, and sausage stuffings are still my favorite.

Stuffing continues to be one of my favorite foods and I look forward to enjoying stuffing as part of the Thanksgiving meal.

Happy Thanksgiving!

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial or Thanksgiving menu advice. Please consult a professional advisor.

Wednesday, November 24, 2010

It's been over four years since I started My Wealth Builder. As I think about topics to write , I often remember, "I've written about that before," and decide to find a new topic. However, since many principles of personal finance are timeless, I want to include them in a recent post on My Wealth Builder. Therefore, I have started a series called "Timeless Articles from the Archives" that will highlight posts from the same week in 2006-2009.

Welcome to sixteenth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic.

For reading convenience, I have listed the posts with brief summaries, often by the author, and organized them into seven categories: Earning, Investing, Insuring and Protecting, Living Frugally, Retiring, Saving and Taxes.

And now onto the Carnival:

Earning

Career Insurance: Insuring Your Most Valuable Asset -"As with anything valuable, you need to take steps to protect your career. That's why financial websites recommend life, health, and disability insurance -- to protect/replace the value of your career in case you die, get sick, or are physically unable to work. Having some form of these insurances is generally wise for almost every worker. But there's another form of insurance that's equally essential. This insurance is free, but it will take some work and planning. I call it "Career Insurance". This Career Insurance is not a product you can buy, but a series of actions you can proactively take to minimize the chance that your career will take a major hit."

Insuring and Protecting

Tools - FireSafe Your Personal Finance Documents! - "It's a nice idea to keep our important personal finance stuff in such a way that we can grab hold of it and leave at a moment's notice. In case we cannot do so, it'd be great to have a back-up at a safe place with an easy access in case of natural calamities or unforeseen disasters ...."

The Question to Ask when Choosing Term Life Insurance: What Are You Protecting? - "We recently began working with a financial planner, and as part of our complete financial planning, looked at term life insurance options. I’m putting this article about term life insurance under “Building Wealth” and “Master Your Money” but it can easily fall under the “Retirement Planning” and “Wealth/Life Balance” categories."

13 Dividend Stocks Providing A Growing Income - "How much money will you need for retirement? This a very difficult question to answer. There are many factors and assumptions that go into estimating the income that will be needed in retirement. However, one certainty is that if you only invest in fixed income instruments, you will need more than if your investments provide you a growing income."

How to Use the Dividend Growth Rate to Select Income Stocks - "Collecting dividend payments from stocks is an excellent way to help prepare for retirement as well as supplement your current income. Savvy investors have been buying up the top dividend stocks for years, slowly building a solid and long lasting income stream. So how do these successful investors know which dividend paying stocks to pick? It is surely not by chasing the highest yields."

Black Friday 2010 Deals: Walmart - "Walmart has posted it’s Black Friday 2010 Ads and circular! There are so many items that have deep discounts! I have posted the full Walmart Black Friday circular so you can develop your shopping strategy!"

That concludes this edition. Submit your blog article to the next edition of The Wealth Builder Carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

About Me

My wealth goal is to create a guaranteed yearly income stream equal to my highest salary for my retirement years. While I have developed a strategy to do this,
I am interested how others are thinking of achieving financial security for retirement.
This blog is a summary of facts, ideas, discussions, and action plans to achieve that goal.

Disclaimer

This is a personal blog about my thoughts, experiences and ideas on building wealth. The contents of this blog are for informational purposes only. No content should be construed as financial advice. Commenters, advertisers and linked sites are entirely responsible for their own content and do not represent the views of My Wealth Builder. All financial decisions involve risks and results are not guaranteed. Always do your own research, due diligence and consult your own professional advisor before making any decision. My Wealth Builder assumes no liability with regard to financial results based on use of information from this blog.

If this blog contains any errors, misrepresentations, or omissions, please contact me or leave a comment to have the content corrected.

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Disclaimer:
This is a personal blog about my thoughts, experiences and ideas on building wealth. The contents of this blog are for informational purposes only. No content should be construed as financial advice. Commenters, advertisers and linked sites are entirely responsible for their own content and do not represent the views of My Wealth Builder. All financial decisions involve risks and results are not guaranteed. Always do your own research, due diligence and consult your own professional advisor before making any decision. My Wealth Builder assumes no liability with regard to financial results
based on use of information from this blog.

If this blog contains any errors, misrepresentations, or omissions, please contact me or leave a comment to have the content corrected.